Base test

Labour & European Law ReviewWeekly Issue 45824 February 2016

Section 1(1)(a) of the Pensions Act 2008 defines a “jobholder” as a worker “who is working or ordinarily works in Great Britain under the worker’s contract”. In R (Fleet Maritime Services (Bermuda) Limited) v The Pensions Regulator, the High Court held that the test to establish where a worker “ordinarily works” must focus on where they are based and not on what it says in their contact.

Basic facts

Fleet Maritime Services (FMS), a company registered in Bermuda, employed a number of seafarers who were resident in the UK but who spent most of their time outside UK territorial waters when working for them.

In July 2014, the Pensions Regulator issued FMS with a compliance notice stating that, under the Pension Act 2008, they were required to automatically enrol two categories of jobholders into a pension scheme. These were:

Workers who lived in the UK, who worked for several weeks at a time on a British or foreign registered vessel in foreign waters and who joined and left that vessel from a port in the UK

Workers who lived in the UK, who started and ended their tour of duty outside the UK but for whom there was evidence to support the view that their work began and ended in the UK.

FMS sought a judicial review of the Regulator’s decision, arguing that the deciding factor was the worker’s contract, while the Regulator argued that the location of a peripatetic worker’s base was the primary consideration.

Decision of High Court

And the judge agreed that the test for deciding whether a seafarer can be regarded as someone who “ordinarily works in Great Britain” is to look at where they are based. Treating a peripatetic worker based in Great Britain for the purposes of their work as someone who “ordinarily works” in Great Britain did not strain the language of the Act unduly, even if most of their work was performed outside Great Britain. The fact that the phrase had been used in the same way in earlier employment protection legislation was itself a reason for interpreting section 1(1)(a) in that way and was obviously the meaning that Parliament had intended.

As such, the judge held that the question of where a peripatetic worker is based in order to decide whether they “ordinarily work in Great Britain under the worker’s contract”, could not necessarily be answered by looking at the terms of their contract but by how the contract was being operated at the relevant time.

Finally, the judge also rejected the argument put forward by FMS that a seafarer appointed to work on a ship for long periods at a time is based on the vessel itself. Instead he held that a base is a place from which the worker sets off at the start and to which the worker returns at the end of a period when travelling in the course of their work. A ship could not constitute a base, as it was simply a means of transport from one place to another.

However, the court found against the regulator in relation to the second category of worker, holding that seafarers who live in Great Britain but who work on a ship which spends most of its time outside Great Britain and whose tours of duty do not habitually begin and end in Great Britain cannot be regarded as based in Great Britain. Nor can they be regarded as workers who ordinarily work in Great Britain under the workers’ contract.

Comment

This is a complex area of law that is often exploited by international employers. The danger is that employees are left “rootless and rightless” if the test is drawn too narrowly. The decision has the advantage of applying settled law to this issue, even if that law is so nuanced as to make it quite difficult for advisers in practice.